UK export growth on brink of contraction in first quarter of 2019

18 March 2019

  • Further Brexit-related disruption and a slowing global economy expected to hasten UK export growth decline
  • German export growth continues to fall and edges closer to point of contraction
  • France becomes top performing exporter among largest EU economies

UK export growth has fallen perilously close to the point of contraction in the first quarter of 2019, according to the latest European Export Index report by accountants and business advisors BDO LLP.

BDO’s Export Growth Index for the UK fell by 0.8 points to 95.6 in Q1 2019, its joint weakest performance since Q1 2016, and just 0.6 points short of contraction. The report indicates that further disruption is expected later this year which will result in continued UK export decline.

German export growth also slowed due to weaknesses in the global automotive industry as car sales continued to stall in key markets. BDO’s Export Growth Index for Germany fell for a fifth consecutive quarter to 96.0 in Q1 2019.

Dismal figures from the UK and Germany are consistent with a broader slowdown in export growth observed across the EU, with BDO’s EU Export Index shrinking from 99.0 in Q4 2018 to 97.5 in Q1 2019. This sharp decline is reflected in global air freight data from January, which was down 1.8% on the level recorded in the same month last year, marking the fastest rate of contraction in three years. Air freight data from Europe was worse still, showing a 3.1% year-on-year demise.

The French economy bucked the trend witnessed across Europe, exceeding expectations to become the top performing exporter among the EU’s five largest economies. The Export Growth Index for France rose by 1.7 points to 101.0 in Q1 2019, and it is expected that output will hold up to end of Q1 as political unrest continues to cool.  

Commenting on the findings, Peter Hemington, Partner, BDO LLP, said: 

“It is troubling to see UK export growth creeping close to entering negative territory, with the strain of political and economic turbulence across Europe taking its toll.

“Future trade deals with the US, China and India will be key to unlocking long-term economic opportunities for UK businesses as Britain leaves the EU. But given the close economic, political and social ties Britain has with Europe, the degree to which both sides can implement arrangements which minimise disruption and avoid a dramatic severing of these links will be critical in shaping the short-term economic outlook.”

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Overview of the BDO indices:

An overview of the Export Performance Indices are provided in the table below, detailing figures for the last four quarters, to allow for comparison.

  Country Q1 2019
(figures for
this report)
Q4 2018 Q3 2018 Q2 2018
BDO Export Growth Index EU 97.5 99.0 99.7 99.8
UK 95.6 96.4 95.6 97.6
Germany 96.0 96.5 98.0 98.9
France 101.0 99.3 97.6 98.9
Spain 97.1 95.7 98.3 97.1
Italy 97.2 97.8 97.9 98.9
BDO Export Inflation Index EU 109.1 108.6 108.7 108.8
UK 103.5 104.0 102.7 100.1
Germany 103.0 105.7 107.3 103.1
France 107.9 105.8 112.9 108.5
Spain 110.5 113.0 108.8 116.7
Italy 103.3 102.5 103.5 101.7

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Methodological notes

The BDO European Export Indices are prepared on behalf of BDO LLP by the Centre for Economics and Business Research ltd., a leading independent economics consultancy. Cebr has particular strengths in all forms of macroeconomic and market forecasting for the UK and European economies and in the use of business survey techniques.

The indices are calculated by combining a range of up-to-date business surveys and hard economic data, from a European and country-specific sources to ‘nowcast’ annual growth in the current quarter. Using surveyed data from sources including the European Commission, IFO, CBI, ISTAT & the Bank of England, as well as trade statistics from the UN and national statistical agencies, Cebr forecasts the level of annual growth in both total exports and export prices

The surveys and historic hard data are combined and correlated against a time series of trade data, individually for export growth and export price growth. Cebr then calculates the strength of the relationship between these variables and the dependent variable, respectively export growth and export price growth for each of the two indices. The variables are then weighted together based on their correlations and strength of relationship. Using this, Cebr nowcasts the current level of export prices and total value of exports in the current quarter. While there may be some data from months within the quarter of release, a nowcasting exercise is used to project whole quarter figures.

Once a quarterly figure has been calculated, the annual growth rate from the same quarter in the previous year is derived. Finally, the growth rate is scaled into an index with 100 as the average long-term growth trend of the country and 95 as the level dividing expansion from contraction.

The process is repeated for all of the five largest economies in Europe, and the combined European Union. Long-term growth, represented by a reading of 100 in the index, is calculated at a EU level for exports and at a national level for export prices.

The results are useful not only as snapshots of the current trends in the export markets of Europe’s largest economies, but also as indicators of turning points and leading indicators of growth.


Paul Wyatt
at Teneo on behalf of BDO LLP

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